In my experience, the benefit of virtualization for SQL server is how much you are willing to trade off improved management for performance.

On the ease of management side, virtualization (VMs with SAN storage) give you ready ability to re-allocate space (disk and physmem) and relocate instances to make better use of hardware with less (or no) downtime.

But depending on the workload, the performance giveup can be huge: as an obvious case, you generally loose the ability to map SQL server partitions to spindles, which will crush performance if your partitions are properly designed. In my company, we have had great results with virtualization for sharepoint and fileserver uses, but my analytics datawarehouse system saw approximately a 10x performance improvement when we eliminated the virtualization (VM and SAN) and ran on the bare metal with the same number of spindles. As we are more than happy to give up some management flexibility for more performance for this application, the bare metal was the way to go.

Which all goes to show that you need to match the solution to the problem.....